JNJ Knocks On FDA Door A Second Time For Broader Use Of Anticlotting Drug Xarelto

Johnson & Johnson (NYSE:JNJ) is resubmitting clinical trials data in a bid to convince the U.S. FDA to approve the expanded use of Xarelto to prevent heart attack and stroke in patients who have previously had severe chest pain or heart attack. ^[1] Xarelto is a drug used for blood thinning and is approved for preventing strokes with indications of abnormal heart rhythms and preventing blood clots in patients with knee or hip replacements. Recently, the FDA rejected the company’s application for broader use of Xarelto even as we expect the company to receive approval eventually.

While JNJ was left disappointed with the rejection of its application, it may have found a silver lining with the unexpected delay in Eliquis, which was earlier expected to be approved by June. Eliquis is being developed by Pfizer (NYSE:PFE) and is considered the closest competitor of Xarelto. While Pfizer is confident about getting approval, it could be pushed to next year. With Xarelto’s rejection, Pfizer had an extra time on its hands to strengthen its position in the cardiovascular division with Eliquis.

See our complete analysis for : Johnson & Johnson | Pfizer

However, if JNJ manages to get approval for Xarelto before Pfizer’s Eliquis, it will have a first mover advantage in acute coronary syndrome market, which is said to cause 1.2 million hospitalizations a year. The disease offers a multi-billion dollar opportunity for the drug manufacturers to come up with an antithrombotic drug that can help prevent heart attack in patients with history of heart problems. An antithrombotic drug helps prevent clotting inside the body that can restrict blood circulation to the organs. JNJ’ Xarelto and Pfizer’s Eliquis belong to the antithrombotic family.

While we expect Eliquis to get approval as the drug is already approved in Europe and has displayed a better safety profile before, any further delay will have a substantial impact on Pfizer’s value as the cardiovascular division contributes nearly 14% of the our current price estimate for Pfizer.

We are in the process of updating our $74 and $25 price estimate for Johnson & Johnson and Pfizer, respectively, to reflect the earnings and recent developments.

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1. Johnson & Johnson submits new data in 2nd shot at more approvals for anticlotting drug Xarelto, Washington Post, Sept 7 2012 [↩]